Here are 5 companies that first drove the Nasdaq above 5,000

It was the day the Nasdaq Composite index first closed above the 5,000 mark, and it got there due in large part to the irrationally exuberant belief that this Internet thing was going to lay an endless supply of golden eggs.

This assumption prompted investors to throw fistfuls of cash at any company whose name had a “.com” suffix, but in the case of some Internet companies, it was a mirage. The dot-com bubble burst, startups evaporated, and investors lost a catastrophic amount of money.

Is Botox becoming part of the Wall Street dress code?

Every profession has a dress code, whether spoken or unspoken. For men on Wall Street, it’s a pretty stringent one. That suit had better be navy blue, that tie had better be in a Windsor knot and if you want to express yourself with your clothes, your exit interview is down the hall to your right.

But now, you can add to that a touch of Botox.

The American Society for Aesthetic Plastic Surgery said that in 2013 alone, 385,000 men had undergone this procedure. Last week, the organization said the 2014 numbers also show the number of men having cosmetic surgery continues to rise, though it didn’t yet release the latest Botox numbers. Todd Schlifstein, owner of Fountain Medical Group in New York City, told Men’s Journal that the men coming in for Botox are “middle-aged, health-conscious, white-collar guys” who want to look not just younger, but fresher.

“Since the 2008 meltdown in the economy and the subsequent repurposing of careers and functions, it has been messy on the Street,” New York-based executive coach Roy Cohen said in an interview. “In the process, fear of job loss, diminished prestige and shrinking income have led men to pay closer attention to image and age.”

For men who want to reboot their image but can’t change their wardrobes, getting a little “work” done can yield the desired benefits. Dr. Norman Rowe, a New York City plastic surgeon, told ABC TV that he’s already seeing men come through his office for Botox, specifically asking for a procedure that will provide what he calls “that Wall Street Wrinkle.”

According to Dr. Rowe, this means that these men don’t want their wrinkles eradicated entirely. They just want enough wrinkles removed to give a fresh look to their faces, yet have enough left over to give the impression of a professional who’s been around the block a few times. After all, they don’t want to give the impression that they’re just kids. And besides, they earned those wrinkles.

“They’re battle scars,” he said. “They’re badges of honor, so to speak.”

He added that they’re not just getting Botox treatments for the brows that they furrowed on behalf of their clients. They’re also getting them in the palms of their hands, to eradicate that troublesome sweaty handshake, and in their armpits, to prevent them from sweating through their Turnbull & Asser shirts.

In a release last week, The American Society for Aesthetic Plastic Surgery said that cosmetic procedures have been gaining traction among men for some time now. ASPS President Scot Glasberg, MD said that the idea that these procedures are the sole province of women is one that should be left in a less enlightened past.

“Male plastic surgery rates have significantly increased since 2000 and the notion that cosmetic procedures are just for women no longer exists,” he said. “Men are seeking to regain a more youthful look, improve their self-image and feel better about their appearance.”

Some men of Wall Street are also choosing other, less painful methods to address that not-so-fresh feeling. Diana Melencio, co-founder of the OkMyOutfit shopping service, spent eight years as a Wall Street analyst. She said her company organizes events for the clientele that used to be her male counterparts. In her experience, they’re not just trying to look younger; they’re trying to feel younger by being pampered, just like their female counterparts.

“We have thrown several events for our male clientele, and a ‘beauty’ service that has proven popular with this trend is at-home barbers,” she said. “We’ve hosted events where hot shaves have proven to be quite popular. Among this crowd, other procedures that come to mind include manicures and so-called ‘male’ facials.”

Today’s Wall Street man has good reasons to leave the Gordon Gekko look behind, in favor of something more youthful and vibrant. Thanks to modern cosmetic products and hypodermic needles full of botulinum toxin, he has ways of getting there that will allow him to keep coming to work in his Brooks Brothers suits.

Here’s the major obstacle Tinder still faces

Bad news for all you left-swiping investors out there: Morgan Stanley analysts aren’t so hot on Tinder’s ability to make money by charging users for a premium version of its wildly popular dating app.

“We see Tinder monetization underwhelming investors, and not ramping fast enough to offset the core dating deterioration,” reads an analyst note about Tinder parent company IAC. Why the negativity? While the Morgan Stanley team acknowledged Tinder’s massive user growth, it also noted that lots of Tinder’s users are young—and young people, the report argues, won’t pay to date.

The analysts also believe that another IAC dating service, Match.com, will also suffer, seeing growth slow between 3% to 8%.

The Morgan Stanley report could throw some cold water on Tinder’s fire after Barclays analysts said the app could be worth as much as $1 billion by the end of 2015 thanks to surging user growth.

Why JPMorgan Chase wants a ‘Wonderful Life’ bank

On Tuesday, at the bank’s annual investor day, when CEO Jamie Dimon took the mic, one of the first things he told investors to do was check out one of the bank’s branches. “Around the country, people bring in their dogs and sit around for social reasons,” said Dimon. “We give out little doggie bones.”

The buzzword these days in big banking is simplicity. And on Tuesday, JPMorgan Chase executives became the latest top bankers to claim they want to be more George Bailey than, well, J.P. Morgan. The bank said it will cut $2.8 billion in expenses from its investment banking division in the next three years. About $1.5 billion of those cost reductions will come from “business simplification.”

JPMorgan JPM has long had one of the largest financial derivatives operations on Wall Street. The bank invented the securities that were used to bet on—and eventually against—the mortgage market. On Tuesday, Daniel Pinto, the head of JPMorgan’s investment bank, emphasized how the bank was looking to reduce its activity in one of the most complex areas of finance. Pinto said the bank would either exit or dramatically scale back its processing of over the counter derivatives transactions for clients. He said the bank also plans to “rapidly compress” its own derivatives exposure.

JPMorgan said it was reducing its derivatives operations on account of new regulations that would require the bank to set aside more capital. Also, if you want to be known as a simpler bank, derivatives is probably not the place you want to be.

The bank on Tuesday said it was looking to reduce the amount of deposits it holds for other businesses by $100 billion, cut back on the amount of lending it does to hedge funds and even close about 300 of its dog-friendly bank branches. All of this comes as an olive branch of sorts to JPMorgan’s critics, who say the bank is too big. Last month, Goldman Sachs issued a report that said JPMorgan would be worth more if it were split up. On Tuesday, though, Jamie Dimon, JPMorgan’s CEO, said he has no plans to do that. “We’re not going to give up investment banking for anyone, not even Richard Ramsden,” said Dimon, referring to the Goldman analyst who wrote the report.

Wall Streeters typically say they are in the business of helping clients manage sophisticated risks and transactions. Stressing simplicity is an odd sales pitch for a large bank like JPMorgan. But the problem Dimon and other top bankers have is that investment banking—in part because of new regulations and also on account of the fact that the business has change—is not as profitable as it used to be. Just four years ago, the return on equity of JPMorgan’s investment bank was nearly 20%. Now, it is half that.

Investors may accept lower return businesses as long as they are convinced that they are lower risk as well. Shares of Morgan Stanley MS, for instance, have outperformed rivals recently, as CEO James Gorman has emphasized lower risk businesses like asset management.

Dimon seems to be getting the message. On Tuesday, he said JPMorgan was really no different than the average regional bank, just, ya know, bigger. In fact, he said this twice.

For a bank that still has a derivatives book with a notional value of $65 trillion, that statement is a stretch. But even as large as it is, JPMorgan is probably far less risky and complex than its detractors would have you believe.

Nevertheless, the notion that JPMorgan is just too big to work seems to be gaining momentum. So, if Dimon wants JPMorgan to remain in investment banking, and all of the many businesses it is in, he needs to sell simplicity. He’s trying his best.

Report accuses HSBC of helping wealthy clients dodge taxes

British bank HSBC Holdings Plc admitted failings by its Swiss subsidiary in response to media reports it helped wealthy customers dodge taxes and conceal millions of dollars of assets.

“We acknowledge and are accountable for past compliance and control failures,” HSBC said late on Sunday after news outlets including French newspaper Le Monde and Britain’s The Guardian published allegations about its Swiss private bank.

The Guardian, along with other news outlets, cited documents obtained by the International Consortium of Investigative Journalists (ICIJ) via Le Monde.

HSBC said that its Swiss arm had not been fully integrated into HSBC after its purchase in 1999, allowing “significantly lower” standards of compliance and due diligence to persist.

The Guardian alleged in its report that the files showed HSBC’s Swiss bank routinely allowed clients to withdraw “bricks” of cash, often in foreign currencies which were of little use in Switzerland.

HSBC also marketed schemes which were likely to enable wealthy clients to avoid European taxes and colluded with some to conceal undeclared accounts from domestic tax authorities, the Guardian added.

The reports triggered political debate in Britain ahead of a parliamentary election in May. Margaret Hodge, a senior opposition Labour Party lawmaker, said UK tax authorities had done too little.

“All the other countries have collected much more,” she told BBC Radio’s Today programme on Monday. “We are never assertive enough, aggressive enough to protect the taxpayer.”

David Gauke, a Conservative lawmaker and a junior minister in the finance ministry, criticised HSBC and said the case lifted the lid on poor banking behaviour at the time.

“Clearly HSBC have got questions to answer. Clearly the behaviour that is set out in these disclosures reveal behaviour in 2005 to 2007 that is not what we would expect from a major bank,” he said, calling tax evasion “completely unacceptable.”

The HSBC client data were supplied by Herve Falciani, a former IT employee of HSBC’s Swiss private bank, HSBC said. HSBC said Falciani downloaded details of accounts and clients at the end of 2006 and early 2007. French authorities have obtained data on thousands of the customers and shared them with tax authorities elsewhere, including Argentina.

Falciani could not be reached for comment. He has previously told Reuters he is a whistleblower trying to help governments track down citizens who used Swiss accounts to evade tax.

Four-page response
HSBC said the Swiss private banking industry, long known for its secrecy, operated differently in the past and this may have resulted in HSBC having had “a number of clients that may not have been fully compliant with their applicable tax obligations.”

Its private bank, especially its Swiss arm, had undergone “a radical transformation” in recent years, it said in a detailed four-page statement.

HSBC’s Swiss private bank was largely acquired as part of its purchase of Republic National Bank of New York and Safra Republic Holdings, a U.S. private bank.

The ICIJ said details of more than 100,000 clients had been obtained from more than 200 countries. It said 11,235 were based in Switzerland, 9,187 were in France, 8,844 were in Britain, 8,667 were in Brazil and 7,499 were from Italy.

The clients’ accounts held more than $100 billion, including $31.2 billion from clients based in Switzerland, $21.7 billion from Britain, $14.8 billion from Venezuela and $13.4 billion from U.S. clients, the ICIJ said.

HSBC said the number of accounts in its Swiss private bank was much lower, however. It could not explain the difference. HSBC said its Swiss private bank had 30,412 accounts in 2007, which had fallen to 10,343 at the end of last year.

HSBC said it was cooperating with authorities investigating tax matters. Authorities in France, Belgium and Argentina have said they are investigating.

Britain viewed criminal prosecutions as difficult to achieve and the tax office had focused on taking civil action, minister Gauke said. The UK tax office said it had brought in 135 million pounds ($205 million) in tax payments, interest charges and penalties after working through the HSBC client list.

Switzerland has charged former HSBC employee Falciani with industrial espionage and breaching the country’s secrecy laws.

Some of the details of the list have been released before. The names of 2,000 Greeks with HSBC accounts was made public in 2010 and dubbed the “Lagarde List” after former French finance minister Christine Lagarde. France passed the names to Greece to help it crack down on tax evasion.

The Justice Department is probing Moody’s over mortgage ratings

The U.S. Department of Justice is investigating Moody’s Investors Services for issuing favorable grades on mortgage deals in the lead-up to the financial crisis, the Wall Street Journal reported on Sunday, citing people familiar with the situation.

The federal probe of the ratings agency, a unit of Moody’s Corp, comes as the Justice Department nears a settlement with Standard & Poor’s Ratings Services, a unit of McGraw Hill Financial Inc, over similar conduct, the Journal reported.

Justice Department officials could not be immediately reached for comment by Reuters.

Former Moody’s executives and Justice Department officials have been meeting to discuss ratings of complex securities prior to the 2008 financial crisis, the Journal reported.

The investigation is in a early stage and it is still unclear whether it will lead to a lawsuit, the Journal reported.

The probe comes as the Justice Department nears a $1.37 billion settlement with Standard & Poor’s for similar alleged conduct, the newspaper reported. The Justice Department sued Standard & Poor’s in 2013 for what it said were misleading ratings of residential mortgages leading up to the 2008 financial crisis.

Box IPO: The $120 million that got away

On its Friday, January 23rd debut, Box Inc BOX did what Wall Street keeps telling us IPOs are supposed to do: Its stock soared.

Box’s underwriters pre-sold the shares at $14, mainly to mutual funds and other institutional investors. By the end of its first day of trading—defying a sharp drop in the S&P—the stock finished at $23.15, a gain of $9.15 or 68%.

Folks who aren’t steeped in Wall Street-think might wonder how any stock that didn’t just receive a sumptuous, totally unexpected takeover offer could jump 70% in a single day. They might also question why big powerful investors got most of the shares at a fabulous insider price, and the great unwashed are mainly relegated to buying Box at a marked-up, post IPO price. As a CEO who went through the process once told me, “In IPOs, the fat cats get the rich cream.”

This is the blueprint that investment banks keep selling to companies that want to go public: Let the stock make a big, big pop. It’s the way to go. You’ll generate great publicity and secure the loyalty of the funds that pocket gigantic, guaranteed gains in a single day. Out of gratitude, they’ll hold your shares through good times and bad. That “loyalty” is mostly ephemeral, but the issuer’s belief in those assurances seems eternal.

Here’s the price Box paid for pre-selling its stock at far less than what investors were paying virtually from the opening bell to the end of the trading day. Box sold 12.5 million shares; so the total gross proceeds were $175 million. Fees and expenses amounted to $17 million, so it will collect $158 million in cash ($175 million less $17 million) from the offering.

But what if Box had resisted the Wall Street pitch and auctioned its shares to the highest bidders? Or what if it had prodded underwriters to pay full price, as Facebook FB did? If Box had gotten total value for those 12.5 million shares, it would have put around $280 million—an additional $120 million or so than it actually collected—on its balance sheet. So it really “cost” Box around $120 million in underpricing, to raise $157 million. It “paid” 76 cents in foregone proceeds for every dollar it collected.

The $120 million Box left on the table equals over 70% of its cash holdings prior to the IPO. An extra $120 million in assets would have raised its net worth by over 40% after the offering.

Those are big numbers. So why do brilliant venture capitalists and brainiac founding teams keep falling for the investment banks’ assurances that raising less money is actually good for them? Hint: It’s usually good for employees, especially the top managers, who are able to secure options and other stock grants at the super-bargain IPO grant price. They then get to take part in the same guaranteed windfall as the institutional investors.

IPOs are one of the great, mysterious Wall Street spectacles. The praise is overwhelming, the definition of “success” is baffling, and anyone who questions the system is taken for a dullard.

Revenue from the bank’s increasingly important wealth management business rose 2.4% to $3.80 billion as equity markets boomed. Overall, earnings attributable to common shareholders rose to $920 million, or 47 cents per share, in the fourth quarter from $36 million, or 2 cents per share, a year earlier, the report said. Legal expenses fell to $284 million from $1.4 billion.

Bank of America’s profit falls on lower trading revenue

The downbeat earnings from big banks continued Thursday, as Bank of America BAC reported lower fourth-quarter profit and revenue.

The second-largest U.S. bank by assets posted a 14 percent fall in quarterly profit, largely due to lower revenue from fixed-income trading.

Net income attributable to common shareholders fell to $2.74 billion, or 25 cents per share, in the fourth quarter from $3.18 billion, or 29 cents per share, a year earlier.

Analysts on average had estimated earnings of 31 cents per share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the reported figures were comparable.

Separately, Citigroup C, in the midst of a pullback from consumer banking in a number of international markets, eked out a slim fourth-quarter profit after taking charges of $3.5 billion to settle legal claims and overhaul operations.

The total charges matched the figure foreshadowed by Chief Executive Mike Corbat in December, but the earnings fell short of the average market estimate.

Adjusted net income fell to $346 million, or 6 cents per share, from $2.60 billion, or 82 cents per share, a year earlier, the No. 3 U.S. bank by assets said.

Analysts on average had expected earnings of 9 cents per share, including charges, according to Thomson Reuters I/B/E/S.

JPMorgan’s profit falls 6.6 percent, hit by legal costs

JPMorgan Chase & Co, the biggest U.S. bank by assets, reported a 6.6 percent drop in quarterly profit Wednesday as legal costs exceeded $1 billion in the wake of government probes into alleged wrongdoing and it set aside more to cover bad loans.

The bank’s net income fell to $4.93 billion, or $1.19 per share, in the fourth quarter from $5.28 billion, or $1.30 per share a year earlier. Revenue on a managed basis fell 2.3 percent to $23.55 billion.

Analysts on average had expected earnings of $1.31 per share on revenue of $23.64 billion, according to Thomson Reuters I/B/E/S. The results for both periods included special items.

The bank said legal expenses rose to about $1.1 billion in the quarter from about $847 million a year earlier. After tax, legal expenses totaled $990 million.

Profit last year was hit by government penalties for failing to report suspicions of fraud by Ponzi-schemer Bernie Madoff.

JPMorgan JPM, the first big U.S. bank to report quarterly earnings, set out to resolve the bulk of its legal liabilities in 2013, when it agreed to pay more than $20 billion in settlements, but litigation costs remain high.

The bank agreed in November to pay a total of $1 billion in penalties to a regulator in the U.K. and two in the United States over its conduct in foreign exchange markets. Investigations into that and other areas of the bank’s business are continuing.